Custom, Excise & Service Tax Tribunal
Ms Adobe Systems India Pvt Ltd vs Ce & Cgst Noida on 26 March, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
E-Hearing
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70025 of 2022
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-681-2021-22 dated
27.09.2021 passed by Commissioner (Appeals) CGST, Noida)
M/s Adobe Systems India Pvt. Ltd., .....Appellant
(Plot No.A5, Noida-Greater Noida Expy,
Sector-132, Noida, U.P.-201304)
VERSUS
Commissioner of Central Tax, Noida ....Respondent
(Commissionerate, Noida) APPEARANCE:
Shri Kapil Vaish, Chartered Accountant for the Appellant Smt. Chitra Srivastava, Authorized Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) FINAL ORDER NO.- 70138/2025 DATE OF HEARING : 02.01.2025 DATE OF PRONOUNCEMENT : 26.03.2025 The present appeal has been filed by M/s Adobe Systems India Pvt. Ltd., assailing the Order-in-Appeal No.NOI-EXCUS- 001-APP-681-2021-22 dated 27.09.2021 passed by Commissioner (Appeals) CGST, Noida.
2. The facts of the case in brief are that the Appellant is engaged in providing taxable services of "Information Technology Service", "Business Auxiliary Services" and "Management Consultancy Service". It exported services to its group companies in Ireland and USA. It has been holding Service Tax Registration No. AACCA2982JST001. An audit of the records of the Appellant was conducted. It was observed that the Appellant had availed Cenvat Credit wrongly on various issues. Accordingly, a Show Cause Notice1 dated 24.10.2011 was issued 1 SCN Service Tax Appeal No.70025 of 2022 2 proposing to disallow Cenvat credit Rs.1,29,31,252/-. The Order- in-Original confirmed the said demand and imposed equal penalty. During Adjudication, the Appellant deposited an amount of Rs.34,306/- and Rs.1,59,252/-, which has been appropriated in the Order-in-Original. On appeal, the Commissioner (Appeals) reduced the disallowance of Cenvat credit to Rs.28,94,515/-. He further observed that during the course of audit, the Appellant could not provide Cenvatable invoices to the Department, due to which Cenvat credit of Rs.52,19,629/- was disallowed by the audit party. However, the Appellant was called for submission of invoices to the Range Office. The invoices were submitted and were verified by Range Officers. The Range office has disallowed the Cenvat of Rs.13,59,462/- after due verification and the remaining amount was allowed by the Range office. He upheld the disallowance of Cenvat credit Rs.13,59,462/-.
3. With regard to disallowance of Cenvat credit of Rs.15,35,053/-, The learned Commissioner (Appeals) observed that the Appellant had taken Cenvat credit on input services, like Adobe reward scheme, cultural event, proforma invoices, lunch, double/excess credit, valuation of stocks, Adobe extra earning, incentive to partners etc; and that the Cenvat credit is allowed only on those input services, which are utilized for providing output services. In the instant case, the Appellant has failed to prove that these input services have any nexus with their output services. He therefore upheld the disallowance of credit of Rs.15,35,053/-. The Commissioner (Appeals) also held that the SCN had been signed by the Commissioner on 24.10.2011 and same has been dispatched on 24.10.2011 which means that the SCN was issued well within time. The learned Commissioner also upheld the imposition of equal penalty under Section 78 of the Finance Act, 1994 read with Rule 15 of Cenvat Credit Rules, 20042 to the extent of Cenvat credit disallowed.
4. The learned Chartered Accountant appearing for the Appellant has submitted as under :-
2CCR, 2004 Service Tax Appeal No.70025 of 2022 3
(i) Show cause notice dated 24.10.2011 has been served for the first time on 01.07.2020 and therefore the entire demand is beyond 5 years.
(ii) Show cause notice dated 24.10.2011 had been adjudicated after about 10 years on 29.01.2021. Therefore, the order is liable to be set aside on the ground of abnormal delay. He relied upon the following decisions in support of his submissions :-
Eastern Agencies Aromatics (P) Ltd. Vs. UOI reported in 2023 (4) Centax 227 (Bom);
Sunrise Remedies (P) Ltd Vs. UOI reported in 2019 (366) E.L.T. 994 (Guj);
Shivkrupa Processors (P) Ltd. Vs. UOI reported in 2018 (362) E.L.T. 773 (Guj).
(iii) Cenvat credit of Rs.15,35,053/- had been disallowed on the ground that the services do not fall within the definition of input service. Similarly, Cenvat credit of Rs.13,59,462/-
has been disallowed on the ground that the invoices are not proper.
(iv) Appellant are engaged in providing marketing of software products to Adobe, Ireland. It has to arrange seminars, awareness sessions, events, conferences etc to meet the potential customers face to face and make them aware of the new launches and latest updates on the existing products. The entire services involving Cenvat credit Rs.28,94,515/- pertain to such services. In this connection, the Appellant referred to the decision of the Tribunal in their own case as reported in 2015 (38) S.T.R. 998 (T) wherein it has been held that Appellant is an exporter of service and all the services fall in the exclusive clause of definition of input service.
(v) With regard to disallowance of Cenvat credit Rs.13,59,462/- it has been submitted that the deficiencies pointed out in the notice are minor procedural lapses. It's a settled law that credit cannot be disallowed for Service Tax Appeal No.70025 of 2022 4 non/incorrect mentioning of the address of the service recipient or non-mentioning of registration of service recipient etc.
(vi) For demanding service tax for the period from April, 2006 to March, 2011, the SCN had been issued on 24.10.2011 by invoking extended period of limitation. They have regularly been filing ST-3 Returns and bonafidely believed that they were eligible for the Cenvat credit. Relying on the decision of this Tribunal in the case of G. D. Goenka Pvt. Ltd., Final Order No.51088/2023 dated 21.08.2023, it has been claimed that extended period of limitation could not have been invoked.
5. The learned Departmental Authorized Representative supports the impugned order and draws my attention to para 4.1 (page 41 of APB) of the order in original wherein the party had contended that SCN was received in 2011 by gate security and not by any authorized person. She therefore contends that the SCN was served to the Appellant in 2011 itself.
6. Heard both the sides and perused the appeal records.
7. Following issues are arising for my consideration in this appeal :-
A. Whether the show cause notice dated 24.10.2011 had been properly served in 2011 or it was served for the first time on 01.07.2020 as claimed by the Appellant. B. Whether the orders passed by the Adjudicating Authority is liable to be set aside on the ground of abnormal delay.
C. Whether Cenvat credit of Rs.28,94,515/- is liable to be disallowed.
D. Whether extended period of limitation is invokable.
Issue A - Whether the SCN dated 24.10.2011 had been properly served in 2011 or it was served for the first time on 01.07.2020 as claimed by the Appellant.
Service Tax Appeal No.70025 of 2022 5
8. During the course of hearing, Appellant have drawn my attention to their letter dated 07.07.2020 (page 145 of APB) (submitted in the Commissionerate on 14.07.2020) wherein they contended that the copy of SCN was served to them for the first time on 01.07.2020 and the period involved is from March, 2006 to March, 2009. On the other hand, the learned Authorized Representative has contended that SCN was served in 2011 to the gate security. The Commissioner (Appeals) in para 6.1 held that the SCN had been signed on 24.10.2011 and is having dispatch No. of 24.10.2011, which means that the SCN was issued well within time.
9. I find that even though Appellant had taken a specific stand before the Adjudicating Authority that the SCN was served for the first time on 01.07.2020, but the Order-in-Original does not deal with this aspect of the matter. The provisions relating to service of decision, order, summon etc., are contained in Section 37C of Central Excise Act, 1944. Section 83 of Finance Act, 1994 refers to various provisions of Central Excise Act which are applicable to service tax also. It includes Section 37C of Central Excise Act, 1944.
Section 37C of Central Excise Act, 1944 reads as under :-
"Section 37C - service of decisions, orders, summons etc -
(1) Any decision or order passed or any summons or notices issued under this Act or the rules made thereunder, shall be served, -
(a) by tendering the decision, order,
summons or notice, or sending it by
registered post with acknowledgment due, to person for whom it is intended or his authorised agent, if any;
Service Tax Appeal No.70025 of 2022 6
(b) if the decision, order, summons or notice cannot be served in the manner provided in clause
(a), by affixing a copy thereof to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case maybe, is intended;
(c) if the decision, order, summons or notice cannot be served in the manner provided in clauses (a) and (b), by affixing a copy thereof on the notice board of the officer or authority who or which passed such decision or order or issued such summons or notice".
10. The Revenue's case is that the notice was properly served in 2011 and it contends that it was served to the security guard. As per Section 37C, the notice should have been served to the person to whom it is intended (Appellant herein) or its authorized agent. I am of the opinion that service of the notice to security guard cannot be deemed to be service to authorized agent. During the hearing, Appellant have relied upon an order passed by this Tribunal in the case of Raja Sethi Financial Services reported in 2017 (49) S.T.R. 432 (Tri.-Allah). In the said case also, the Appellant had contended that the SCN was never served to the Appellant. The Tribunal held that :-
"On perusal of the Order-in-Original, I find that the Adjudicating Authority have not recorded any satisfaction of service of the show cause notice before proceeding to pass an ex parte order. Under the facts and circumstances, I hold that the show cause notices have not been validly served as required under the provisions of the Act read with the Rules thereunder. Accordingly, the impugned orders are not tenable and the same are set aside. The Appellant will be entitled of consequential Service Tax Appeal No.70025 of 2022 7 benefits, if any, in accordance with law. The misc. application for early hearing also stands disposed of".
11. I also refer to the Tribunal's order in the case of Collector of Custom Vs. Shani International reported in 1993 (67) E.L.T.
206. In the said case the service of SCN to clearing agent has been held to be not a proper service. Para 5 of the order reads as under :-
"We have considered the submissions. In the case of Collector of Customs, Cochin v. M/s. Trivandrum Rubber Works Limited, supra, this Tribunal after referring to the relevant provisions of the Customs Act and the case law on the point concluded that service of Show Cause Notice demanding the duty on clearing agent is not a valid service after the goods have been released and that the importer to whom the demand notice was issued beyond the period of six months cannot be made to pay the duty under Customs Act, merely because a copy of the notice was sent to the clearing agent in time. Besides for the reasons mentioned by the Collector (Appeals) (with which we agree) we are satisfied that the Department has failed to prove that the less charge demand was issued within six months from the date of the payment of the duty."
12. The ratio of law laid down in the aforesaid case is squarely applicable to the facts of the present case. There is nothing on record to show that the SCN was served to the Appellant or its authorised agent any time during 2011.
13. Accordingly, I hold that notice was served to the Appellant for the first time on 01.07.2020, which is much beyond the extended period of 5 years. As I propose to allow the appeal on Service Tax Appeal No.70025 of 2022 8 this ground itself, it is not necessary for me to deal with the other issues raised by the Appellant in the appeal.
14. In the light of above discussions, the demand of service tax and penalty imposed on the Appellant are set aside. The appeal filed by the Appellant is allowed with consequential relief, as per law.
(Order pronounced in open court on - 26.03.2025) (P. K. CHOUDHARY) MEMBER (JUDICIAL) LKS